Correlation Between BlackRock Capital and BlackRock Utility

Can any of the company-specific risk be diversified away by investing in both BlackRock Capital and BlackRock Utility at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BlackRock Capital and BlackRock Utility into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock Capital Allocation and BlackRock Utility Infrastructure, you can compare the effects of market volatilities on BlackRock Capital and BlackRock Utility and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BlackRock Capital with a short position of BlackRock Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Capital and BlackRock Utility.

Diversification Opportunities for BlackRock Capital and BlackRock Utility

0.45

Correlation Coefficient

BlackRock Capital  BlackRock Utility

Very weak diversification

The 3 months correlation between BlackRock and BlackRock is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Capital Allocation and BlackRock Utility Infrastructu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Utility and BlackRock Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BlackRock Capital Allocation are associated (or correlated) with BlackRock Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Utility has no effect on the direction of BlackRock Capital i.e., BlackRock Capital and BlackRock Utility go up and down completely randomly.

Pair Corralation between BlackRock Capital and BlackRock Utility

Given the investment horizon of 90 days BlackRock Capital Allocation is expected to under-perform the BlackRock Utility. But the stock apears to be less risky and, when comparing its historical volatility, BlackRock Capital Allocation is 1.26 times less risky than BlackRock Utility. The stock trades about -0.26 of its potential returns per unit of risk. The BlackRock Utility Infrastructure is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  2,345  in BlackRock Utility Infrastructure on September 24, 2024 and sell it today you would lose (87.00) from holding BlackRock Utility Infrastructure or give up 3.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BlackRock Capital Allocation  vs.  BlackRock Utility Infrastructu

BlackRock Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Capital Allocation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BlackRock Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BlackRock Utility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Utility Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, BlackRock Utility is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BlackRock Capital and BlackRock Utility

The main advantage of trading using opposite BlackRock Capital and BlackRock Utility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Capital position performs unexpectedly, BlackRock Utility can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BlackRock Utility will offset losses from the drop in BlackRock Utility's long position.

The idea behind BlackRock Capital Allocation and BlackRock Utility Infrastructure pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.